Question

Dan invests £1200 into his bank account.
He receives 5% per year compound interest.
How much will Dan have after 5 years?
Give your answer to the nearest penny where appropriate

Answer 1

Dan will receive £ 1531.54 in 5 years.

Step-by-step explanation:

Given :

• Principal (P) = £1200
• Interest rate (r) = 5%
• Time (n) = 5 years

To find :

• A = Amount (Future Value) after 5 years

Solution :

$A = P \: (1 \: + \: \dfrac{ r }{100} ) ^{n}$

$A = 1200 \: (1 \: + \: \dfrac{5}{100} ) ^{5}$

$A = 1200 \: (1 \: + \: 0.05) ^{5}$

$A = 1200 \: (1.05)^{5}$

$A = 1200 \: \times \: 1.27628$

$A \: = \: 1,531.54$

A = £ 1531.54

∴ Dan will receive £ 1531.54 in 5 years.

Answer 2

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According to the Question we have to find the amount that Dan will receive after 5 years.

Given :-

• Principal (P) = £1200
• Interest rate (r) = 5%
• Time (n) = 5 years

Required Solution :-

$\to$$A = P(1 + \frac{r}{100} )^{n}$

$\to$$A = 1200(1 + \frac{5}{100} ) ^{5}$

$\to$$A = 1200(1 + 0.05)^{5}$

$\to$$A = 1200(1.05) ^{5}$

$\to$$A = 1200 \times 1.27628$

$\to$$A = 1531.54$

$\to$$A = £1531.54$

Therefore, Dan will receive £1531.54 in upcoming 5 years !

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